ECB to review securities lending and bond purchases

Drew Nicol, Securites Lending Times

The European Central Bank (ECB) is preparing to review its securities lending and bond purchase programmes at its upcoming 8 December meeting.

“The ECB’s securities lending is proving valuable for smooth market functioning, and it is being reviewed on an ongoing basis,” explained an ECB spokesperson.

The central bank may choose to loosen its lending rules in order to open up a larger portion of the more than €1 trillion worth of government bonds it has collected so far in a bid to avoid a drought of eurozone high-quality liquid assets (HQLAs).

Bonds could be made more attractive by making collateral requirements more flexible, cutting lending fees or accepting more long-term lending terms.

Assets collected as part of the ECB’s public sector purchase programme were initially made available for securities lending in a decentralised manner by eurosystem central banks from April 2015. Corporate sector bonds were also added to its lending programme in July 2016. Read more